Assume you can purchase a 3 bedroom rental townhome for 350,000. The down payment required is 15%. You finance the remaining amount with a 5% 30 year fixed term loan. You estimate the your annual property taxes will be $1350 and your annual homeowners insurance expense will be $800. You plan on charging $1950 per month in rent. You plan to sell the property in 13 yrs for $435,000. The appropriate inflation adjusted discount rate is 3.2% per annum. What is the NPV of this rental?

Assume you can purchase a 3 bedroom rental townhome for 350,000. The down payment required is 15%. You finance the remaining amount with a 5% 30 year fixed term loan. You estimate the your annual property taxes will be $1350 and your annual homeowners insurance expense will be $800. You plan on charging $1950 per month in rent. You plan to sell the property in 13 yrs for $435,000. The appropriate inflation adjusted discount rate is 3.2% per annum. What is the NPV of this rental?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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